9911796707
TMI Blog1970 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi (which are recognised Stock Exchanges within the meaning of section 2(39) of the Companies Act, 1956), for "enlisting" its shares. The subscription list of the company was closed on June 21, 1965. On June 22, 1965, the Bombay Stock Exchange extended the time for consideration of the application till the expiry of seven weeks from the date of closing of the subscription list and requested the company to furnish certain particulars to facilitate compliance with section 73 of the Companies Act, 1956. On August 6, 1965, the Exchange informed the company that the application was receiving further consideration and requested that certain formalities be complied with. On September 13, 1965, the Exchange informed the company that it had considered and approved the application for "enlisting" its shares. On June 9, 1965, the Calcutta Stock Exchange called upon the company to modify certain articles of association, and by letter dated July 12, 1965, asked for particulars in respect of specified matters. On July 27, 1965, the Calcutta Stock Exchange granted time for compliance till the end of the seventh week from the date of the closing of the subscription list. On November 5, 1965, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem to "enlist" the shares of the company. Against the decision of Rangarajan J. the Union of India appealed to a Division Bench of the High Court of Delhi. The two Exchanges acquiesced in the orders passed against them. The High Court confirmed Sec p. 116 supra the order of Rangarajan J. With certificate granted by the High Court, the Union of India has appealed to this court. In support of these appeals, two principal contentions were urged on behalf of the Union: (1)the permission granted by the Bombay Stock Exchange after the expiry of seven weeks violated the provisions of section 73(1) of the Companies Act, 1956, and was on that account invalid ; and (2)that grant of permission by one out of the three Exchanges did not protect the allotment of shares from being invalid under section 73(1) of the Companies Act, 1956. The two Stock Exchanges which had acquiesced in the judgment of Rangarajan J. urged that the order granting writs of mandamus requiring the two Exchanges! to enlist the shares of the company was without jurisdiction. Rangarajan J., it was said, could only direct that the applications be considered by the two Exchanges. The relevant provisions of section 73 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government may, after giving the stock exchange an opportunity of being heard, vary or set aside the decision of the recognised stock exchange, and when it does so the stock exchange shall be bound to act in conformity with the orders of the Central Government". Sub-section (5) of section 73 of the Companies Act, 1956, is intended to be explanatory of sub-sections (1) and (2) of section 73. Before that sub-section was amended by Act 31 of 1965 different phraseology was used in sub-sections (1) and (2) and in sub-section (5): the former used the expression "permission has not been granted", whereas sub-section (5) used the expression "permission shall not be deemed to be refused". The expression "permission has not been granted" is ambiguous: it may mean "permission has been refused" : it may also mean that the application for permission is under consideration and has not been disposed of. Sub-sections (1) and (2) of section 73 were borrowed from section 51 of the English Companies Act, 1948, with slight modifications. But the draftsman of the Indian Act, for reasons which it is difficult to appreciate, substituted the expression "permission has been refused". In enactin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her consideration will be given to the application. It is however not enacted in section 73(1) that if the application is not granted within the time prescribed it cannot be granted after the expiry of the prescribed period, even if the exchange has intimated that it will give further consideration to the application. Sub-section (5) contains a clear implication to the contrary. If the exchange has intimated within the period prescribed by sub-section (1) that the application will be given further consideration, it is not to be deemed that the application is refused. The exchange is not obliged to give any intimation relating to the consideration of the application before the last day of tile prescribed period. If no intimation is given till the last date of the prescribed period, no inference of refusal follows. It would then be difficult to hold that if the exchange intimates that it is considering the application or intends to give further consideration to the application such an inference may follow. The amendment made by Act 31 of 1965 in sub-section (5) by the substitution of the expression "permission shall not be deemed to be refused" by the expression "it shall not be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcutta and Delhi Stock Exchanges for permission for official quotations of the shares of the company. It is not contended, and it cannot reasonably be contended, that only one application for permission to secure quotation of the shares in an approved exchange may be made. The expression "a recognised stock exchange" means "any recognised stock exchange". More applications than one for a quotation of shares may therefore be made. In the present case, three applications were submitted on June 3, 1965. Two of these applications were rejected and one was granted. We are unable to hold that unless all the applications were granted, the allotment of shares must, by virtue of sub-section (1) of section 73, be invalid. The object of section 73(1) is that the subscribers to the shares must have facility to approach an exchange for having their holdings converted whenever they desire. Even if out of several exchanges approached, one or more, but not all, have granted the application for "enlistment", the facility of ensuring quick conversion is still available. If after representing in the prospectus that an application has been made to a recognised exchange for "enlistment" or will be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 73(1) declares the entire allotment void : it does not take into consideration the right or convenience of individual shareholders. An enquiry whether a shareholder or a class of shareholders was or were induced to subscribe for shares on representation is irrelevant in determining whether the allotment is rendered invalid for failure to secure compliance with a statutory condition. We need not consider whether the individual shareholder who finds that an exchange convenient to him has not listed the shares furnishes a cause of action to him for avoiding the contract. We are, in the view we have taken, not called upon to decide whether the provisions of section 73 of the Companies Act, 1956, are ultra vires, nor do we consider it necessary to decide whether section 22 of the Securities Contracts (Regulation) Act, 1956, is ultra vires. It was urged on behalf of the Delhi and Calcutta Stock Exchanges that the High Court ought, in exercise of the power under Order 41, rule 33, of the Code of Civil Procedure, to have vacated the writ of mandamus issued requiring them to grant permission for quotation of the company's shares. An appellate court may, in appropriate cases, pass an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
